Influence of Green Risk Attitude on Green Investment: Moderating Role of Financial Anxiety

Abstract

Purpose – With the growing emphasis on sustainability in financial markets, it is increasingly important to understand how psychological and financial factors shape investment behavior. Hence, this study investigates the influence of green risk attitude on green investment behavior, with financial anxiety as a moderating variable, thereby enriching the current understanding of behavioral drivers behind sustainable investing.

Design/methodology/approach – The study follows a quantitative, cross-sectional design, utilizing survey data from 216 Indian retail individual investors across Tricity region of Chandigarh, Panchkula, and Mohali. Data were collected through a structured questionnaire and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) to assess the hypothesized relationships among green risk attitude, green investment, and financial anxiety.

Findings – The results reveal a significant positive relationship between green risk attitude and green investment behavior, indicating that individuals with a higher tolerance for environmental and financial risks are more inclined to invest in sustainable financial instruments. However, financial anxiety was found to negatively moderate this relationship, suggesting that even risk-tolerant investors may refrain from green investing when experiencing high levels of financial stress.

Practical implications – The findings highlight the need for targeted financial education and anxiety-reduction strategies to enhance investor confidence and participation in green finance. Policymakers, financial institutions, and educators can play a crucial role in promoting financial literacy and emotional resilience, thereby enabling broader adoption of sustainable investment practices.

Originality/value – This study advances the literature on behavioral finance and green investment by integrating the role of green risk attitude and financial anxiety into the investment decision-making framework. By examining financial anxiety as a psychological moderator, the study offers a nuanced perspective on the barriers to sustainable investing, particularly within the evolving Indian investment landscape.